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Aeolus Perspectives 2nd Edition: Which is the “block” to blockchain? Solving the paradox in transportation and logistics for seizing the opportunity


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Blockchain can be a big opportunity for Transportation and Logistics. However, its adoption in the T&L industry is proceeding slower than might be expected given the potential benefits coming from its application. A recent BCG survey confirms that companies are skeptical quite enough. Paradoxically, the “block” to create a common blockchain ecosystem seems to be that same mistrust blockchain could contribute to mitigate.

Not only bitcoin. Beyond that, blockchain, the digital infrastructure born for supporting the circulation of cryptocurrency, can find application in several other sectors. Transportation and logistics (T&L) are included, of course. But, how can the blockchain enable more efficient and cost-saving business operations for T&L companies too?

Let’s take a step back. What is blockchain? It is a system in which a record – that could be a transaction made in bitcoin or even also an information built along a complex supply chain - is maintained across several computers that are linked in a peer-to-peer network. The same blockchain infrastructure features guarantee that all the within data are securely recorded, on safe, immutably in real time. Most of all, data in the blockchain cannot be manipulated in any way.

Advantages for transportation and logistics industry are more than one. First of all, the blockchain-enabled platforms allow easy coordination of documents on a shared distributed ledger, making physical paperwork largely unnecessary. Then, approvals and customs clearance can be quicker and more efficient, reducing processing times for goods at customs checkpoints. Moreover, blockchain can help to answer to the organizations are asking for more and more traceability of their flows as well as for really updated, secure and authentic data to make their own decisions. This innovative technology also ensures trustworthy data across the transportation and logistics ecosystem, since the overall network apparently contributes to their validation. Besides, blockchain provides a scalable, immediate solution for order tracking and authentication. This last one could soon become a critical point in order to serve better and better a growing demand for same-day and one-hour delivery service.

So, all the T&L companies are running fast towards blockchain, aren’t they? Not so fast, for what it seems. The adoption of the blockchain by the transport and logistics industry is proving slower than might be expected given the magnitude of the potential benefits. By increasing transparency, the blockchain can mitigate the mistrust that often exists in multiparty transactions in the T&L sector. Yet, this same mistrust makes it hard to bring together the industry’s many participants into a common blockchain ecosystem. The paradox has been revealed by a recent survey realized among executives from more than 100 T&L companies by Boston Consulting Group (BCG) and of which the results are reported in the study “Resolving the Blockchain Paradox in Transportation and Logistics”.

According to the large majority of respondents to the BCG survey (88%), the blockchain technology will disrupt the industry, at least somewhat. And most of them (59%) believe that this will happen within the next two to five years. Moreover, 74% of interviewed executives confirm that they are exploring opportunities only superficially or have never thought about blockchain at all. According to 60%, the obstacles to a wider adoption of blockchain are an absence of coordination among industry players, a limited understanding of the technology, and a lack of in-house capabilities. Finally, 16% of interviewees feel to have a clear understanding of blockchain technology and its implications for their own sector, while about 20% of them include blockchain among the top ten strategic priorities of their company.

The BCG report also underlines the opportunity and the need for the T&L companies to resolve the “blockchian paradox”. Benefits for this include improvements in terms of speed, traceability, load security, billing and payment processes that can lead to substantial cost reductions, helping to alleviate the intense pressure on margins experienced by many operators in the sector. And, last but not least, blockchain may also be useful to develop completely new and winning business models.

Therefore, operators must be able to understand how this innovative technology can create value by reducing the points of friction in their operations. By doing so, by collaborating with suppliers, customers and even competitors, a company can understand and implement solutions that meet its specific business needs.

To promote a wider adoption of blockchain in transport and logistics and so catching the important advantages coming from this, T&L industry participants must work together to develop an ecosystem that builds trust and mutual benefits along the value chain.

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